First Active to defend major damages claim

First Active, and insolvency expert Mr Ray Jackson of KPMG, said yesterday that they would fully defend themselves against a damages claim that some reports have estimated at €100 million.

Developer Mr Brian Cunningham and three of his companies, which First Active placed in receivership in April, have issued High Court proceedings against the mortgage lender and Mr Jackson.

The allegations against First Active and Mr Jackson include negligence, breach of duty and trespass. Recent reports have estimated the claim's potential cost at €100 million, but it is understood that the papers served on the bank and Mr Jackson do not state how much Mr Cunningham and his companies are seeking.

A spokeswoman for First Active said yesterday that both it and Mr Jackson would fully defend themselves against the claim, and said they believed it was groundless.

The companies involved are Moorview Developments, Salthill Properties and Valebrook Developments. First Active loaned them a total of €40 million last year, but appointed Mr Jackson receiver of all three in April. This move was triggered by fears that the companies' debts would outstrip their assets.

The companies are involved in developments in Coolock, Dublin, and Salthill, Galway.

The companies are part of the Cunningham Group, of which former Taoiseach, Mr Albert Reynolds was chairman up to six weeks ago. One-time IDA boss, Mr Padraig White, was also on its board, but is no longer a director.

Part of the proceedings will involve lawyers for the plaintiffs asking the High Court to declare that First Active was acting as a shadow director.

If they succeed, this would mean that the bank could be liable to the companies in the same way as a director.

Legal experts yesterday said it would be theoretically possible to have the bank declared a shadow director.